SEC Filings

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Cash from Operating Surplus as defined in the Partnership Agreement is a cash
accounting concept, while the Company's historical and pro forma financial
statements have been prepared on an accrual basis. As a consequence, the amount
of pro forma Available Cash from Operating Surplus shown above should only be
viewed as a general indication of the amount of Available Cash from Operating
Surplus that might in fact have been generated by the Company had it been
formed in earlier periods. For definitions of Available Cash and Operating
Surplus, see the Glossary.
COMPANY STRUCTURE AND MANAGEMENT
The Company is a Delaware limited partnership recently formed to acquire, own
and operate substantially all of the NGL, isomerization, MTBE and propylene
processing and distribution assets of EPCO. The operations of the Company will
be conducted through, and the operating assets will be owned by, the Operating
Partnership and various subsidiary entities. Upon consummation of the
Transactions, the Company will own a 98.9899% limited partner interest in the
Operating Partnership, and the General Partner will own a 1% general partner
interest in the Company and a 1.0101% general partner interest in the Operating
Partnership. The General Partner therefore will own an aggregate 2% interest in
the Company and the Operating Partnership on a combined basis.
The General Partner will be responsible for the management and operation of
the Company's business. In accordance with the Partnership Agreement, the
Company, the General Partner and EPCO will enter into the EPCO Agreement
pursuant to which the senior management and employees of EPCO will continue to
manage and operate the Company's business. Pursuant to the EPCO Agreement, EPCO
will be reimbursed at cost for all expenses that it incurs in connection with
managing the business and affairs of the Company, except that EPCO will not be
entitled to be reimbursed for any selling, general and administrative expenses.
In lieu of reimbursement for such selling, general and administrative expenses,
EPCO will be entitled to receive an annual administrative services fee that
will initially equal $12.0 million. The General Partner, with the approval and
consent of the Audit and Conflicts Committee, will have the right to agree to
increases in such administrative services fee of up to 10% each year during the
10-year term of the EPCO Agreement and may agree to further increases in such
fee in connection with expansions of the Company's operations through the
construction of new facilities or the completion of acquisitions that require
additional management personnel.
Conflicts of interest may arise between the General Partner and its
affiliates, on the one hand, and the Company, the Operating Partnership and the
Unitholders, on the other, including conflicts relating to the compensation of
the directors, officers and employees of EPCO and/or the General Partner,
increases in the administrative services fee in accordance with the EPCO
Agreement and the determination of fees and expenses that are allocable to the
Company. The Audit and Conflicts Committee will consist of two independent
members of the General Partner's Board of Directors that will be available at
the General Partner's discretion to review matters involving conflicts of
interest. See "Management" and "Conflicts of Interest and Fiduciary
Responsibilities."
The Company's principal executive office is located at 2727 North Loop West,
Houston, Texas, 77008, and its telephone number is (713) 880-6500.
The following chart depicts the organization and ownership of the Company and
the Operating Partnership immediately after giving effect to the consummation
of the Transactions, including the sale of the Common Units offered hereby, and
assuming that the Underwriters' over-allotment option is not exercised. The
percentages reflected in the chart represent the approximate ownership interest
in each of the Company and the Operating Partnership individually and not on an
aggregate basis. Except in the chart, the ownership percentages referred to in
this Prospectus reflect the approximate effective ownership interest of the
Unitholders in the Company and the Operating Partnership on a combined basis.
The 2% ownership percentage of the General Partner referred to in this
Prospectus reflects the approximate effective ownership interest of the General
Partner in the Company and the Operating Partnership on a combined basis.
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